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Nursing home certificate-of-need laws should be jettisoned in order to boost care quality and encourage innovation within the sector, one expert argued last week.

In a blog post for the Health Affairs Blog, Duke economics professor Henry Grabowski, Ph.D., said that certificate-of-need laws that restrict bed growth would be “unfathomable” for other industries such as hotels, but are still widely used under the belief that they help rein in Medicaid spending. Currently 34 states have such laws in place.

“The rationale underlying this regulation has always struck me as somewhat dubious,” Grabowski wrote. “The notion that public nursing home spending would greatly increase in the absence of a bed constraint simply does not make sense.” 

Grabowski pointed to previous research that found certificate-of-need laws to negatively impact access and quality of care, while pushing up private-pay prices. He also argues that providers are driving the retention of CON laws due to their concerns about keeping occupancy levels high.

“This guaranteed occupancy is a boon for nursing homes, but hurts consumers,” Grabowski said. “If a nursing home cannot maintain sufficient occupancy without certificate of need, it is likely a sign that the nursing home is not providing adequate quality.” 

Repealing the laws would help improve care access and quality, increase price competition among providers and spur innovation within the industry, he said. 

“A number of innovative nursing home models are being piloted all over the country,” Grabowski said. “Yet, certificate of need impedes this innovation and provides existing nursing homes with too much market power at the expense of the very people they care for.”